Essays on macroeconomic effects of fiscal policy rules

Economic and Monetary Union can be characterised as a complicated set of legislation and institutions governing monetary and fiscal responsibilities. The measures of fiscal responsibility are to be guided by the Stability and Growth Pact, which sets rules for fiscal policy and makes a discretionary fiscal policy virtually impossible. To analyse the effects of the fiscal and monetary policy mix, we modified the New Keynesian framework to allow for supply effects of fiscal policy. We show that defining a supply-side channel for fiscal policy using an endogenous output gap changes the stabilising properties of monetary policy rules. The stability conditions are affected by fiscal policy, so that the dichotomy between active (passive) monetary policy and passive (active) fiscal policy as stabilising regimes does not hold, and it is possible to have an active monetary - active fiscal policy regime consistent with dynamical stability of the economy. We show that, if we take supply-side effects into ac-count, we get more persistent inflation and output reactions. We also show that the dichotomy does not hold for a variety of different fiscal policy rules based on government debt and budget deficit, using the tax smoothing hypothesis and formulating the tax rules as difference equations. The debt rule with active monetary policy results in indeterminacy, while the deficit rule produces a determinate solution with active monetary policy, even with active fiscal policy. The combination of fiscal requirements in a rule results in cyclical responses to shocks. The amplitude of the cycle is larger with more weight on debt than on deficit. Combining optimised monetary policy with fiscal policy rules means that, under a discretionary monetary policy, the fiscal policy regime affects the size of the inflation bias. We also show that commitment to an optimal monetary policy not only corrects the inflation bias but also increases the persistence of output reactions. With fiscal policy rules based on the deficit we can retain the tax smoothing hypothesis also in a sticky price model.

The Macroeconomic Effects of Fiscal Policy in a Small Open Economy under a Flexible Exchange Rate Regime

This licentiate's thesis analyzes the macroeconomic effects of fiscal policy in a small open economy under a flexible exchange rate regime, assuming that the government spends exclusively on domestically produced goods. The motivation for this research comes from the observation that the literature on the new open economy macroeconomics (NOEM) has focused almost exclusively on two-country global models and the analyses of the effects of fiscal policy on small economies are almost completely ignored. This thesis aims at filling in the gap in the NOEM literature and illustrates how the macroeconomic effects of fiscal policy in a small open economy depend on the specification of preferences. The research method is to present two theoretical model that are extensions to the model contained in the Appendix to Obstfeld and Rogoff (1995). The first model analyzes the macroeconomic effects of fiscal policy, making use of a model that exploits the idea of modelling private and government consumption as substitutes in private utility. The model offers intuitive predictions on how the effects of fiscal policy depend on the marginal rate of substitution between private and government consumption. The findings illustrate that the higher the substitutability between private and government consumption, (i) the bigger is the crowding out effect on private consumption (ii) and the smaller is the positive effect on output. The welfare analysis shows that the less fiscal policy decreases welfare the higher is the marginal rate of substitution between private and government consumption. The second model of this thesis studies how the macroeconomic effects of fiscal policy depend on the elasticity of substitution between traded and nontraded goods. This model reveals that this elasticity a key variable to explain the exchange rate, current account and output response to a permanent rise in government spending. Finally, the model demonstrates that temporary changes in government spending are an effective stabilization tool when used wisely and timely in response to undesired fluctuations in output. Undesired fluctuations in output can be perfectly offset by an opposite change in government spending without causing any side-effects.

Heparin versus 0.9% sodium chloride intermittent flushing for the prevention of occlusion in long term central venous catheters in infants and children: A systematic review

Background Around the world, guidelines and clinical practice for the prevention of complications associated with central venous catheters (CVC) vary greatly. To prevent occlusion, most institutions recommend the use of heparin when the CVC is not in use. However, there is debate regarding the need for heparin and evidence to suggest normal saline may be as effective. The use of heparin is not without risk, may be unnecessary and is also associated with increased costs. Objectives To assess the clinical effects (benefits and harms) of heparin versus normal saline to prevent occlusion in long-term central venous catheters in infants, children and adolescents. Design A Cochrane systematic review of randomised controlled trials was undertaken. - Data sources: The Cochrane Vascular Group Specialised Register (including MEDLINE, CINAHL, EMBASE and AMED) and the Cochrane Register of Studies were searched. Hand searching of relevant journals and reference lists of retrieved articles was also undertaken. - Review Methods: Data were extracted and appraisal undertaken. We included studies that compared the efficacy of normal saline with heparin to prevent occlusion. We excluded temporary CVCs and peripherally inserted central catheters. Rate ratios per 1000 catheter days were calculated for two outcomes, occlusion of the CVC, and CVC-associated blood stream infection. Results Three trials with a total of 245 participants were included in this review. The three trials directly compared the use of normal saline and heparin. However, between studies, all used different protocols with various concentrations of heparin and frequency of flushes. The quality of the evidence ranged from low to very low. The estimated rate ratio for CVC occlusion per 1000 catheter days between the normal saline and heparin group was 0.75 (95% CI 0.10 to 5.51, two studies, 229 participants, very low quality evidence). The estimated rate ratio for CVC-associated blood stream infection was 1.48 (95% CI 0.24 to 9.37, two studies, 231 participants; low quality evidence). Conclusions It remains unclear whether heparin is necessary for CVC maintenance. More well-designed studies are required to understand this relatively simple, but clinically important question. Ultimately, if this evidence were available, the development of evidenced-based clinical practice guidelines and consistency of practice would be facilitated.

Net neutrality in Australia: The debate continues, but no policy in sight

The ways in which Internet traffic is managed have direct consequences on Internet users’ rights as well as on their capability to compete on a level playing field. Network neutrality mandates to treat Internet traffic in a non-discriminatory fashion in order to maximise end users’ freedom and safeguard an open Internet.

Integrating urban ecosystem sustainability assessment into policy-making: Insights from the Gold Coast City

This paper introduces a policy-making support tool called ‘Micro-level Urban ecosystem Sustainability IndeX (MUSIX)’. The index serves as a sustainability assessment model that monitors six aspects of urban ecosystems, hydrology, ecology, pollution, location, design, and efficiency based on parcel-scale indicators. This index is applied in a case study investigation in the Gold Coast City, Queensland, Australia. The outcomes reveal that there are major environmental problems caused by increased impervious surfaces from growing urban development in the study area. The findings suggest that increased impervious surfaces are linked to increased surface runoff, car dependency, transport-related pollution, poor public transport accessibility, and unsustainable built environment. This paper presents how the MUSIX outputs can be used to guide policy-making through the evaluation of existing policies.

Altruism, Trade Policy, and the Optimality of Foreign Aid

There are many studies in the literature that deal with the welfare effects of income transfers between nations in a general equilibrium setting. An important impetus for this extensive literature was the demonstration of the transfer paradox; that the donor country could actually gain from a transfer of income to another, and that the recipient could lose as a result of the gift. The reason for this paradoxical result is that the transfer gives rise to a terms-of-trade effect that may be especially beneficial to the donor and detrimental to the recipient. Subsequently, many papers have established conditions under which this paradox will or will not occur. Early work by Samuelson (1954) was followed by demonstrations of paradoxes by Gale (1974), Ohyama (1974), Brecher and Bhagwati (1982) and Bhagwati, Brecher and Hatta 1983, 1985, and Dixit (1983)) among others.1 More recently, many studies have examined whether or not foreign aid — tied and untied — can be welfare improving for both the donor and the recipient (see, for example, Turunen-Red and Woodland (1988), Kemp and Wong (1993), Schweinberger (1990), Hatzipanayotou and Michael (1995), Lahiri and Raimondos-Moller 1995, 1997, Djajić, Lahiri and Raimondos-Møller 1996a, 1996b, and Lahiri, Raimondos-Møller, Wong and Woodland 1997.2

Competition for aid and trade policy

This paper considers the optimal allocation of a given amount of foreign aid between two recipient countries. It is shown that, given consumer preferences, a country following a more restrictive trade policy would receive a smaller share of the aid if the donor country maximises its own welfare in allocating aid. If, on the other hand, the donor country allocates aid in order to maximize the sum of the welfare of the two recipient countries, the result is just the opposite. Finally, we analyze the situation where the recipient countries compete with each other for the given amount of aid. It is shown that this competition tends to lower the level of optimal tariffs in the recipient countries.

Guest editorial: End of life law, ethics, policy and practice

The International Conference on End of Life: Law, Ethics, Policy and Practice was held at Queensland University of Technology, Brisbane, Australia in August 2014. It was co-hosted by the Australian Centre for Health Law Research, the Dalhousie Health Law Institute (Canada) and the Tsinghua Health Law Research Center (China). The conference attracted almost 350 delegates from 26 countries and included representation from over a dozen different disciplines with an interest in end of life care.

Realities on the ground: Human trafficking constructs in Thailand and the implications on NGO anti-trafficking prevention strategies

This thesis is a qualitative study that examines how participating staff from Thai based non-governmental organisations interpret and construct the notion of human trafficking; and how this impacts prevention methods. The research examined the impact of different socio-cultural, political and religious ideologies on anti-trafficking prevention and programme implementation. Findings highlighted that while a 'raid and rescue' approach to human trafficking was widely recognised by donors and the media; it was not suitable or complementary to sustainable and community focused anti-trafficking models. Rather, a holistic approach that considers contextual factors and inter-agency collaboration is essential for effective anti-trafficking prevention strategies.

Osteoporosis medication dispensing for older Australian women from 2002 to 2010: Influences of publications, guidelines, marketing activities and policy

Purpose Developments in anti-osteoporosis medications (AOMs) have led to changes in guidelines and policy, which, along with media and marketing strategies, have had an impact upon the prescribing of AOM. The aim was to examine patterns of AOM dispensing in older women (aged 76–81 years at baseline) from 2002 to 2010. Methods Administrative claims data were used to describe AOM dispensing in 4649 participants (born in 1921–1926 and still alive in 2011) in the Australian Longitudinal Study on Women's Health. The patterns were interpreted in the context of changes in guidelines, indications for subsidy, publications (scholarly and general media), and marketing activities. Results Total use of AOM increased from 134 DDD/1000/day in 2002 to 216 DDD/1000/day in 2007 but then decreased to 184 DDD/1000/day in 2010. Alendronate was the most commonly dispensed AOM but decreased from 2007, while use of risedronate (2002 onward), strontium ranelate (2007 onward) and zoledronic acid (2008 onward) increased. Etidronate and hormone replacement therapy (HRT) prescriptions gradually decreased over time. The decline in alendronate dispensing coincided with increases of other bisphosphonates and publicity about potential adverse effects of bisphosphonates, despite relaxing indications for bone density testing and subsidy for AOM. Conclusions Overall dispense of AOM from 2002 reached a peak in 2007 and thereafter declined despite increases in therapeutic options and improved subsidised access. The recent decline in overall AOM dispensing seems to be explained largely by negative publicity rather than specific changes in guidelines and policy.

Universalization of access to modern energy services in Indian households-Economic and policy analysis

Provision of modern energy services for cooking (with gaseous fuels)and lighting (with electricity) is an essential component of any policy aiming to address health, education or welfare issues; yet it gets little attention from policy-makers. Secure, adequate, low-cost energy of quality and convenience is core to the delivery of these services. The present study analyses the energy consumption pattern of Indian domestic sector and examines the urban-rural divide and income energy linkage. A comprehensive analysis is done to estimate the cost for providing modern energy services to everyone by 2030. A public-private partnership-driven business model, with entrepreneurship at the core, is developed with institutional, financing and pricing mechanisms for diffusion of energy services. This approach, termed as EMPOWERS (entrepreneurship model for provision of wholesome energy-related basic services), if adopted, can facilitate large-scale dissemination of energy-efficient and renewable technologies like small-scale biogas/biofuel plants, and distributed power generation technologies to provide clean, safe, reliable and sustainable energy to rural households and urban poor. It is expected to integrate the processes of market transformation and entrepreneurship development involving government, NGOs, financial institutions and community groups as stakeholders. (C) 2009 Elsevier Ltd. All rights reserved.